Owners of second homes who abuse a tax loophole by claiming their often-empty properties are holiday lets will be forced to pay under tough new measures
Owners of second homes who abuse a tax loophole by claiming their often-empty properties are holiday lets will be forced to pay under tough new measures announced by the government today (14 January 2022).
The changes will target people who take advantage of the system to avoid paying their fair share towards local services in popular destinations such as Cornwall, Devon, the Lake District, Suffolk, West Sussex and the Isles of Scilly.
Currently, owners of second homes in England can avoid paying council tax and access small business rates relief by simply declaring an intention to let the property out to holidaymakers. However, concerns have been raised that many never actually let their homes and leave them empty and are therefore unfairly benefiting from the tax break.
Following consultation, the government will now bring changes to the tax system, which will mean second homeowners must pay council tax if they are not genuine holiday lets.
From April 2023, second homeowners will have to prove holiday lets are being rented out for a minimum of 70 days a year to access small business rates relief, where they meet the criteria.
Holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts.
Properties will also have to be available to be rented out for 140 days a year to qualify for this relief.
Secretary of State for Levelling Up Rt Hon Michael Gove said:
Kurt Jansen, Director of the Tourism Alliance said:
The move will protect genuine small holiday letting businesses across the country and will support local economies by encouraging tourism and by ensuring second homeowners pay a fair contribution towards public services.
Around 65,000 holiday lets in England are liable for business rates of which around 97% have rateable values of up to £12,000. Currently, there is no requirement for evidence to be produced that a property has actually been commercially let out.
Further Information
The government’s consultation response announces that, from 1 April 2023, a property will only be assessed for business rates rather than council tax if the owner can provide evidence that:
The Valuation Office Agency will be responsible for determining whether a property should be assessed for council tax or business rates under this new system.